A Wave Of Insecurity

For More Than 50 Years Social Security Has Taken Care Of America's Elderly. But Now, Jittery Baby Boomers Are Asking: Will It Be There When We Retire?

April 4, 1993|By Mike Thomas of the Sentinel Staff

You probably have never heard of Iuka, Mississippi.

But if you went there, you would find hundreds and hundreds of engineers busy designing a giant rocket.

The rocket will cost $3 billion to develop and will be slapped on the space shuttle to give it an extra boost to get into orbit.

The problem is this: It is NASA's rocket and NASA doesn't want it.

It seems that NASA has spent millions and millions of dollars fixing up its old booster rocket, the one that caused the Challenger disaster. And it did such a good job, it would like to forget this new rocket.

So last year, NASA said, Tell thosefolks in Iuka nevermind. Sorry about that $1 billion we've already spend on it.

And so the White House said, Kill the rocket.

And Congress said, Kill the rocket.

But then this guy named Jamie Whitten said, Shut up and build the dadgum rocket!

And everyone said, Okay!

And so NASA is spending another $360 million this year building the rocket nobody wants except Jamie Whitten.

This is because Mr. Whitten is chairman of the House Appropriations Committee, which means he has a big say over where federal money goes. So everyone in Congress likes to stay on his good side.

Mr. Whitten's Congressional district, by the way, happens to include Iuka.

You may ask: What does all this have to do with Social Security?

Well, your retirement money is helping to build the rocket.

Mr. Whitten is getting lots of federal bucks for his district, and you are getting an IOU in your retirement account. He is not alone. Politicians, like hungry foxes, are gobbling up your nest egg, leaving you with the shell.

What's the moral of the story? It's never too early to start training your child for a career in the NBA.

Before we delve into Social Security, a quick test to gauge your knowledge:

You're a baby boomer. Will you get Social Security ?

A) Yes.

B) No.

C) About enough to cover beer and Geritol.

The money you put into Social Security is:

A) Being invested for your future.

B) Being spent on rockets.

C) Being mailed to Lee Iacocca.

Your parents:

A) Love you and deserve your support in their old age.

B) Are nice, but you wish they'd get their mitts out of your paycheck.

C) Are a bunch of selfish old geezers who are stealing money from hungry children.

Now, if you picked any of the answers to any of the questions, you may be right.

That's because Social Security is not black and white. It is, excuse the pun, gray all over. And so you can't really trust what the politicians or special interest groups say about it because everyone has their spin.

As a public service, this story is designed to teach some basics about Social Security.

Read carefully--especially you baby boomers--lest in your old age you wind up living in one of your kids' spare bedrooms listening to this through the walls: He's your father! You tell him to quit clipping his toenails on the carpet!

Let's begin at the beginning.

It was 1935 and Franklin Roosevelt was in the process of building what we now refer to as: big government.

The Great Depression was in full swing and a lot of old folks were in desperate shape. Their savings and their pensions were shot and many were living in poverty.

FDR decided to give them money and help them out. So he proposed somthing pretty radical. The government would set up a national pension, guaranteeing all the old folks some money in their twilight years.

The idea was sold as an insurance program. You invested money in it, and when you retired, you got your investment back in the form of a government check. Of course, this wasn't entirely true. Social Security was, in truth, more like a welfare program in which benefits were given out based on age.

The tax was going to start out at only a meager 1 percent. And it would be capped at $30 annually. (Of course, $30 back then was a good week's salary). Nobody would have to pay more than that, even if they made $1 million.

The first checks weren't due to go out until 1942, when money had built up in the pot. But FDR and Congress were generous and started two years early by sending the first monthly benefit check for $22./54 to Ida Mae Fuller, 65, of Ludlow, Vermont.

Ida's checks kept coming until she died at the age of 99.

Ida ended up collecting $20,000 in Social Security.

While she was working, Ida had paid a total of $22 into the system.

Is it any wonder old folks grew to love Social Security?

Social Secutiry rolled along through the 1940s and people thought it was really great. So did Congress. It increased benefits by a whopping 77 percent in 1950.

Also that year, there was a historical event: the first increase in Social Security taxes.

But it wasn't too hefty. That's because for every retiree getting a Social Security check, there were about 16 workers contributing to the fund. The burden was spread out. A little money bought a lot of benefits.

And, to be blunt, the elderly didn't hang around very long to collect checks after retiring. This was because of things like cigarettes, asbestos and lard.